Town Square

The Secret PUSD Lawsuits: Zangle v. Pleasanton Unified School District

Original post made
by Yet Another Lawsuit, Ponderosa,
on Feb 27, 2012

I am wondering why lawsuits are filed against Pleasanton Unified School District that never seem to appear on the PUSD agendas. Are they intentionally hiding these lawsuits from the public?

I wonder why the lawsuit where Zangle has filed a lawsuit in excess of $1 million against PUSD has never seemed to appear on any published agenda produced by Pleasanton Unified, even though the lawsuit was filed 4/19/2011. Zangle is the software provider of PUSD's student information system.

According to the lawsuit, PUSD stopped paying Zangle July 1, 2009 and since that time has been using the software without a license. The software company alleges copyright and trademark infringement, breach of contract, theft and software piracy, violation of the 14th amendment of the Constitution, illegal access to servers, illegal download of intellectual property, improper transfer of the licensed product to unauthorized third parties, and failure to have a public bidding process for contracts. On February 4, 2010, it gave 180 days notice to PUSD to return the product. On 04/19/11, a lawsuit was filed in Federal court.

Two PUSD law firms, Stubbs & Leone and Atkinson Andelson Loya Ruud & Romo, have been assigned to this case. No wonder the press hasn't reported on this because it hasn't even appeared on any PUSD meeting agenda. Has PUSD been hiding this lawsuit from its own board as well as the public? Shouldn't these lawsuits have appeared on PUSD's own audits?

Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 27, 2012 at 9:43 am

It is likely this and other lawsuits are only discussed in closed session (until action is taken and that must be reported out--and if the board is giving direction to staff or attorneys, they must report in open session that they are giving direction in the matter). However, the Brown Act is very clear that any litigation being discussed must be posted on the agenda--in this case it should be reading PUSD vs. Zangle.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 9:59 am

Kathleen, you are exactly right, but there is no listing of Zangle v. Pleasanton Unified School District anywhere on any closed session agenda from April 19, 2011 to the present that I can find. Also two weeks after the lawsuit was filed, there was Measure E Parcel Tax election on May 3, 2011.

Many parents and employees smell a cover-up.

Once PUSD was sued by this company, it should have appeared under Existing Litigation in the Closed portion of the agenda in the next board meeting after the filing of the lawsuit. That next board meeting was April 26, 2011. Here is the agenda for April 26, 2011 and there was no mention of this lawsuit... Web Link

The timing would certainly would indicate that the PUSD did not want the public to know about this lawsuit right before the Measure E mail in ballots were due.

Also on PUSD's own website, for many months, it advised customers to not even try to contact the software vendor or not to use Google to attempt to try to find out anything (funny, huh?). Here is the quote:

"Zangle Parent Connection
For questions or support issues, email zanglehelp@pleasanton.k12.ca.us. Please do not contact the vendor (C Innovations or zangle.com). The vendor cannot issue logins or assist with questions about the PUSD Zangle system. It is also not recommended that you use Google or other search engines to locate information or our login page--you may end up in another school district."

For example, if anyone uses Google to look up Pleasanton and Zangle or more specifically "zangle vs. pleasanton", anyone would easily find the reference to the lawsuit, for example in the www.norcalrelief.org meeting minutes from a Pleasanton meeting held in September 2011.

Posted by Bill
a resident of Amberwood/Wood Meadows
on Feb 27, 2012 at 11:13 am

Zangle INC is a shell company owned by Vermont Equity Partners, LLC. C Innovation created the software application, Zangle, but went bankrupt. The private equity firm brought the assets with the the stated intent of supporting the Zangle software package by licensing the product and charging maintenance fees to the school districts.

The problem is that Zangle INC is not a software company but a PE firm. I doubt if any of the partners even know how to write a line of code let alone develop a Windows application. The real intent of this shell company is to force the school districts into paying a ransom for them to drop the lawsuit accusing the school districts of failing to pay license fees and to honor maintenance contracts.

Vermont Equity Partners, LLC, paid 1.6 million dollars for C Innovation and is hoping to raise over 100 million dollars through this ransom scheme.

Where in the heck is the CA Attorney General? This company, like all other PE firms are nothing but fim-flam scams.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 11:30 am

Stacey and Bill, thanks for the info.

Why do no agendas for Pleasanton Unified mention this lawsuit at all?

Also, if you Google the following -- pleasanton "zangle programs and costs" -- it shows that something was discussed on June 22, 2009 at the PUSD board meetings, but all files associated with this meeting including the agenda and board reports and minutes and webcast have seemed to have been mysteriously removed from the internet. It looks like the June 22, 2009 meeting may have had relevant information. Can anyone find a link that works to that PUSD board meeting or the files or webcast?

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 11:44 am

The former PIO was given the position as the Zangle technology coordinator in the June 29, 2009 meeting after the missing meeting. If the former PIO was the Public Information Officer and Zangle technology coordinator, why was no information made available to the public at all about the Zangle lawsuit?

"Create Combined Position of Management Assistanti'Coordinator 2, Technology We feel that we need at a minimum a part time position that can do PIO work and coordinate the Zangle program with teachers, parents, and students. ln regard to Zangle, while we are not planning to expand intonew services provided by the program, we do not feel that we can discontinue the "Parent Connect" portion of the program. Both the currentPIO position and its administrative assistant position would not be ﬁlled. Our current PIO is the one who can most efﬁciently and effectively do thiswork. To enable us to provide some PIO service and continue our supportfor Zangle, we recommend that we combine two positions into one. Thecombined position would be funded by not filling the vacant classified position that would otherwise be ﬁlled by the PIO and by using management team concessions. Critically, this position would also provide technology support to the Assistant Superintendent of Education Services who will be managing all of the assessment programs in the district. The combined position we have created to do this work is a 40%Management Assistant and 60% Technology Coordinator. There has beensome talk about sharing a PIO with the City. We feel that we need to have someone on site work with us on a daily basis. The employee in this position sits as a part of Cabinet to better understand the issues at hand,and we have impromptu meetings with the Cabinet almost daily to addresscurrent critical issues. We would not be well served by a PIO whose office is away from ours. With that said, we would still like to coordinate with theCity for longer term projects (e.g. quarterly newsletters). Cost - $113,419 (salary and statutory beneﬁts)Funding Source - Salary of Classiﬁed Position plus $23,000 in management team concessions Budgeted? - Yes"

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 12:15 pm

Here is an article called "Has the District Been Zangled" from 2006 Web Link that claims that C Innovation at the time that article was written was not even registered as a California corporation.

This other person who claims to be the founder says C Innovation has been shut down and there is some reference to dishonesty. Web Link

Why was the significant exposure to the PUSD having implemented the software of a company that might not even exist anymore or is suing the District not noted in the District's recent audit report?

Where did Zangle come from? When PUSD bought this software and contracted with this company originally, did they:

1. Obtain Board Approval (if so where is it...can't find any minutes)
2. They check if it was an actual bona fide business fully registered in CA as a business?
3. Do reference checks and if so did they find this 2006 article?

YAL, interesting how you're directing all your fire against PUSD rather than at Zangle. I know that it's fashionable on these forums to blame PUSD for everything, but from the information posted here it's pretty apparent that Zangle is on a fishing expedition not just against PUSD but against other school districts as well. Why not direct some of your ire at those behind Zangle who are choosing to pursue these fishing expedition lawsuits against school districts when they know very well that our schools are strapped for money?

Posted by ZangleGate
a resident of Downtown
on Feb 27, 2012 at 1:07 pm

I've read through all of these URLs. If a CEO and CFO failed to disclose a lawsuit to its shareholders in a private sector, they'd be fired. I'm a member of the public, a taxpayer and a shareholder in the public schools. Whoever is filling the government equivalent of the CEO and CFO positions that failed to make this disclosure in PUSD need to go.

Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 27, 2012 at 1:15 pm

YAL, I could almost believe the new administration wasn't aware of the Brown Act rules for posting--but two law firms, not so much. As to materials, they are required to keep them; many districts only post a couple of years' worth on line though. It would require a public information request to get older materials and minutes. The video, last time I checked, only had to be maintained for 30 days. Many districts keep tapes or DVDs much, much longer based on the availability of space to do so.

Posted by ZangleGate
a resident of Downtown
on Feb 27, 2012 at 1:16 pm

I read the URL's. Did you Sam?

This uber private company, C Innovation, has (or had?) an official Delaware-stated corporate address is a single-family residence on a suburban street near a golf course in Salt Lake City, says they have been in business since 1968 with thousands of clients, but declined to name any.

According to the Delaware Department of State, C Innovation, Inc. had not filled out the back of their annual report listing their officers.

PUSD bought software for a Student Information System from a house near a Utah golf course? Unbelievable.

Then Zangle sues the District. Then the District hides the lawsuit.
Reminds me of the White House 'plumbers unit.'

Posted by ZangleGate
a resident of Downtown
on Feb 27, 2012 at 1:22 pm

Thank you, Ms. Ruegsegger.

I looked through the URL's. A lawsuit is listed from time to time with the case number and name of some person called Lozano Smith on their agendas. The Zangle lawsuit is never mentioned in any agenda I can find from 2011 to 2012.

Seems pretty clear to me the PUSD knew what the rules were and purposely hid this particular one. Non-disclosure and timing before the parcel tax seems suspicious too.

ZangleGate: "PUSD bought software for a Student Information System from a house near a Utah golf course? Unbelievable."

You don't know what you're talking about. There are many small software shops in this day and age which are little more than a few people (or less) operating out of a house. Most of those apps on the Apple App store are built by small outfits. I use a pretty sophisticated x-ray diffraction analysis package from the company that has a fancy website and logo but in actuality is a two-man operation. But that's irrelevant, isn't it? What matters is the quality of the software and whether it does its intended job well or not.

Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2012 at 1:46 pmStacey is a registered user.

Sam,

I agree there's not much of an issue with purchasing software from two guys running a business out of their garage. But would you still buy software from an alleged business that doesn't even fill out its annual corporation reporting forms? You'd be putting your own business at risk by not checking up on whether you're investing in some fly-by-night setup or not.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 2:34 pm

Stacey is correct. No one in PUSD, a government agency with stringent contracting rules governed by State law, appears to have done any due diligence of readily available information prior to contracting this with company.

This was not some simple 'download from the web' piece of software to do do something simple. It bought an entire enterprise software application suite from a company whose website in 2009 had "Coming Soon" under ABOUT US.

Now the software now appears to have no owner, and the company says it was either founded 5 years ago, 15 years ago or in 1968, depending upon what you read.

Also PUSD looks to have taken great strides to not disclose any reference to the lawsuit Zangle Inc filed against PUSD as a respondent in April 2011.

So, Stacey, making the BIG assumption that what "ZangleGate" says is true, you think that the fact that the parent company did not fill out the "back of their annual report listing their officers" is some kind of big, giant smoking gun, do you? Did it occur to you that it might have been an innocent oversight completely unrelated to everything else that has been happening to Zangle? Or do you dismiss it as an impossibility that any legitimate company could ever mistakenly omit to fill out the back of their annual report listing their officers? Wonderful to have 20-20 hindsight isn't it? Yeah, Stacey, you criticize PUSD for not being careful enough in its dealings while at the same time you blindly accept as true some information provided by some anonymous crank who calls himself "ZangleGate". See the irony?

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 3:44 pm

More excerpts from "Has the District Been Zangled" article (The "I" refers to the author of this 2006 article at Web Link . [Sounds like the Bernstein's and Woodward's of the Pleasanton Weekly should be making a few phone calls to report about this:]

"Contacted at C Innovation's Claremont, California offices, Bill Naughtin said he is an employee of C Innovation who has been in the education technology field since 1968 and has a list "a thousand school districts long" of references but declined to name any of them. C Innovations is, he said, "extremely privately held--and we like it that way...."

....The last visible-thus-far piece of this puzzle is Larry Anderson, whom Mr. Naughtin confirmed is "an owner" of C Innovation, Inc along with several other companies.....

.... It should be noted that "Complete Nursing Services," the for-profit terminally ill child care company in Spokane, appears
to no longer be in business as the phone numbers listed are no longer
working numbers. ....

....Also there is "Recruiter-Rater." "Although I have called several times in the past four days, no one picks up and the recording is the same. "Thank you for answering my ad." It is a cheerful young woman named Terry who tells callers that she is western regional vice
president of an unnamed 20-year old multi-million dollar finance company with the backing of three major banks. "This opportunity is not your ordinary Iowa cornfed beef sales job," she tells callers, and she is looking for two to three determined assertive salespeople who must know how to dress for success and are gregarious, charming, impulsive and "a bit dramatic...." "

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 4:30 pm

Lawsuits do in fact leave copious amounts of paper trails and electronic paper trails, Georgia, even if those at the PUSD are trying to hide it or are having their shredders work overtime. Go to the Northern California federal court website and have a read through:

Interesting that the innovations and zangle web domains are now located with a company out of a Chantilly Virginia address located in Northern Virginia. I wonder what the relationship is to Centurion Research Solutions?

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 5:15 pm

When Zangle filed bankruptcy, Pleasanton Unified was listed along with 11 other school districts as being overdue and having past due annual license fees it had not paid on time amounting to $93,468.00. Why did Pleasanton Unified not pay its bills?

Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2012 at 6:04 pmStacey is a registered user.

Sam,

You're right that I didn't bother to waste my time verifying information that I thought was irrelevant to the bigger picture which is why I only posted the Ventura Star article and not also the other link ZangleGate had posted. I tried to help you look past ZangleGate's clearly poor generalization of all home-based businesses that you hyper-focused on and bring your attention to the larger issue of due diligence. I'm very sorry to see it was met with more hyper-focusing on something used merely for illustrative purposes.

Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 27, 2012 at 6:15 pm

YAL, Don't know Centurion.

I don't know whether the lawsuit is frivolous or not (and it appears these are blanket suits at a minimum) or whether Zangle has infractions of its own. If the board is discussing it in closed session, then it needs to be noted on the agenda and reported out in open session. Districts get sued or have claims against them all the time and most are settled or dismissed quickly (someone's car is hit by a district vehicle for example).

My personal concern is how we MAY have district staff and board members bending, or not knowledgeable about, the rules that govern their responsibility to the community.

Posted by Bill
a resident of Amberwood/Wood Meadows
on Feb 27, 2012 at 6:35 pm

This is a convoluted mess.

C Innovation was the original company. Assets were purchased by Vermont Capital Partners who renamed the resulting shell company Zangle Inc. Vermont Capital Partners is also known as Brookventure Partners. Somehow Brookventure is connected to the Vermont Economic Development Authority.

This is why the school districts are not paying. Would you pay any money to a ghost organization? I would definitely take my changes in court. There is a lot explaining to do on how these partners operate and make a legal living.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 6:58 pm

Bill, you have information that is interesting. The court case, however, says that Pleasanton stopped paying this vendor in 2009 which looks to be way before the buyout and way before the bankruptcy filing. The time PUSD stopped paying looks to be according to the documents at the court site are about when the former PIO was appointed the technology coordinator of Zangle according to what is remaining on the PUSD internet site. How could the former PIO or a CFO stop paying a vendor without specific Board authorization? I see no Board resolution. Do you?

Supposedly there is a board resolution somewhere where a claim is denied according to court records, but I haven't found that yet.

Also, only a handful of school districts are past due on their payments. One is Pleasanton. Why is Pleasanton on the list with school districts like Detroit Public Schools?

As for you Georgia, you either aren't searching correctly. The judge is Richard M Neiter. Call him. Or contact the PUSD lawyers that were listed in the case, Helen R Frazer from Atkinson Andelson Loya Ruud & Romo or Katherine A Alberts from Stubbs & Leone. (Let me guess...those are gibberish too).

Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2012 at 7:19 pmStacey is a registered user.

YAL,

It's a bit hard to find the case with the info you gave. Neiter is a federal bankruptcy judge at the Central district, not Northern. Also, don't you need a PACER account to access case info for the federal court system?

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 7:36 pm

I can't find anywhere in any minutes from PUSD where they denied C Innovations claim in closed session, but maybe PUSD removed it from their website or were pretty sloppy and never recorded it in the Minutes or maybe there was never any discussion.

The lawsuit has a strongly worded August 27, 2010 certified letter Exhibit C from the vendor to someone named Parvin Ahmadi claiming the District illegally violated the software license product agreement and failed to return the software as required in 180 days. There is a reply on Nov 2, 2010 saying the board denied a claim which one could interpret to mean that PUSD refused again to return the software back after this letter, but I am only guessing.

There is an old agenda item on the PUSD website saying there was a closed session item regarding C Innovations and a claim on Sept 14, 2010 at this weblink Web Link

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 27, 2012 at 7:58 pm

Stacey, you can try Pacer with this link ecf.cacb.uscourts.gov/cgi-bin/iqquerymenu.pl?1356004 The Pacer case is 1356004 You may need to get a Pacer userid to go further though some people have luck with recapthelaw.org which doesn't require a Pacer userid.

It's called Closed Session for a reason. No one can discuss current, ongoing litigation. PUSD was not obligated to, and probably not allowed to report out of closed session. School districts find themselves in lawsuits often so I'm not sure why any of you are concerned with this one. Nothing was hidden, as you calimed in starting this blog thread. What's your real purpose here?

You all need to chill out. Or get jobs. Or run for school board so you can have actual, accurrate information rather than arm-chair quarterbacking.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 29, 2012 at 4:01 pm

Either the PUSD illegally violated the Brown Act either by communicating offline and in secret to its Board members regarding the fact that a Zangle lawsuit was in fact filed April 19, 2011 and then getting their input offline and in secret or perhaps the superintendent tried to hide the whole lawsuit from the Board as well. Which is it?

Every item to be discussed in Closed Session must be listed on the Closed Session agenda. Ongoing litigation, including the lawsuit which was filed, which was the topic of discussion, must be disclosed in the Closed Session agenda portion. PUSD was obligated to disclose this lawsuit on its agenda under Closed Session and failed to do so. It broke the law. It is usually under the heading "Existing Litigation."

PUSD has never in fact published any Closed Session agenda since April 19, 2011 disclosing a Closed Session agenda item Existing Litigation which indicates a lawsuit was filed by Zangle against PUSD was ever filed.

The media didn't even know it exists and the town has 3 newspapers covering PUSD as well as the Pleasanton Patch.

There is an old agenda item on the PUSD website saying there was a closed session item regarding C Innovations and a claim on Sept 14, 2010 which was discussed above.

Posted by Yet Another Lawsuit
a resident of Ponderosa
on Feb 29, 2012 at 4:08 pm

PUSD was obligated by the Brown Act to publish a Closed Session agenda item every time since April 19, 2011 the Zangle Inc v. PUSD lawsuit was discussed in Closed Session similar to this City agenda item where public comment was received and then the elected body adjourns into Closed Session to discuss the case.

Posted by Frank Timms
a resident of Charter Oaks
on Mar 27, 2012 at 4:08 pm

Just a little info to maybe understand what happened. Can't verify this but it's what I've been told, and it makes sense. Zangle does, or did have many districts across the country using their systems. They were starting to make big inroads into California when, I'm guessing, "the people that left", thought they could start their own company and make a bunch of money supporting the systems. The local school districts had probably never met the corporate people and like the local guys, so I'm guessing they were told, let your contract expire and we'll take over the support. I suppose the parent company didn't see the humor in this and fought the new guys stealing customers. And thus the district is stuck in the middle, basically betting on the wrong guys. Anyway, just what I've been hearing for the last few years in the world of software.

Posted by Me
a resident of Another Pleasanton neighborhood
on May 17, 2012 at 8:55 am

Break out the tin foil hats jet contrails are infecting the PUSD school district. Those evil teachers and administartors did business with a software company that went out of business. They should have read the mines of the departing employees. They did not spend an evening discussing this or many other baseless lawsuits in an open forum. Absconders eeewwww

Posted by A concerned parent
a resident of Another Pleasanton neighborhood
on Jul 11, 2012 at 6:35 pm

I have spoken with the CEO of C Innovation Inc. when Zangle was purchased by Pleasanton School District.
I wish to help all of your clear up what is being and has been said about your product Zangle and the company that sold it to your district.

Pleasanton signed a contract with C Innovation Inc. ( then the exclusive provider of the Zangle product to Districts.) Then through dishonesty canceled the Contract with C Innovation Inc. and through misleading information agreed to have then fired employees of C Innovation Inc., (employees that have admitted under oath to stealing the source code of this product) Install and train the district on the new product.

Employees of the district hid information and mislead the districts financial people about what they were doing. Hence the lawsuit.

Mr. Anderson stated to me that "In all my business career which spans 40 years and millions of dollars of business I have never met nor dealt with a more dishonest group of people than the ones in charge of the purchase and installation of the Zangle product at Pleasanton "

According to public testimony, Zangle Inc is not the company that sold to the District. Zangle Inc and Gary Loyd controlled companies are now the holder of the Copyrights of the product Zangle. This sale happened long after the demise of C Innovations operations, and I must say it appears that Pleasanton District had a lot to do with this demise.

The employees of the District put the new student information system at risk with no consideration for the effect it might have on the Districts future financial condition.

I believe that many heads should role , but as we all know District employees are protected by their unions and the fact that they are working for protected public District.

I also notice that the staff of this publication has withdrawn the statements made by Larry Anderson by claiming that they are unverified
Information.

Who better to verify than the former CEO of C Innovation Inc.

I smell another cover up with the staff here.

Everything I have posted here is a matter of public documents that have been filed in the lawsuit mentioned and a 2nd lawsuit in Delaware.

That lawsuit is about the apparent illegitimate action of John Uhler claiming to be the CEO now of the defunct C Innovation Inc. I checked with the State of Delaware and this is not fact either.

Lets see if the staff has the public trust at heart and allows this message to be seen